On March 26, 2008, the Department of Homeland Security (DHS) issued a supplemental proposed rule on procedures for employers who receive a “no-match letter” from the Social Security Administration (SSA) or a “notice of suspect document” from the Department of Homeland Security (DHS) casting doubt on the employment eligibility of the employer’s workers. The previous final rule, which was published on August 15, 2007, was preliminarily enjoined by the U.S. District Court for the Northern District of California on October 10, 2007. The DHS issued the new supplemental proposed rule to clarify certain aspects of the August 2007 final rule and to respond to three findings underlying the district court’s injunction.
The agency seems essentially determined to press ahead with its previously stated plans despite concerns about their potential negative impact. The New York Times warned in a March 27, 2008, editorial that the DHS’s plan will “throw thousands of law-abiding American workers and companies off a cliff in perilous economic times,” noting that the SSA’s inspector general estimated that about 17.8 million of the agency’s 435 million records contain errors that could lead to a no-match letter, and that 70 percent of those 17.8 million records belong to native-born Americans.
The DHS’s supplemental proposed rule addresses three findings of the district court, which questioned whether the DHS had: (1) supplied a reasoned analysis to justify what the court viewed as a change in the DHS’s position: that a no-match letter may be sufficient, by itself, to put an employer on notice, and thus impart constructive knowledge, that employees referenced in the letter may not be work-authorized; (2) exceeded its authority (and encroached on the authority of the Department of Justice [DOJ]) by interpreting the antidiscrimination provisions of the Immigration Reform and Control Act of 1986; and (3) violated the Regulatory Flexibility Act by not conducting analysis of the rule’s impact on small businesses.
The DHS noted that although the mere receipt of an SSA no-match letter may not obligate employers to repeat the full I–9 employment verification process, employers “cannot turn a blind eye to SSA no-match letters and should perform reasonable due diligence.” The supplemental proposed rule emphasizes the idea of eliminating ambiguity and confusion regarding an employer’s responsibilities upon receipt of a no-match letter, acknowledging that previous guidance was in the form of case-by-case responses to individual queries from employers and others, resulting in a lack of uniformity and multiple interpretations by employers.
The DHS said that SSA no-match letters are sent to employers whose wage reports reveal at least 11 workers with no-matches, and where the total number of no-matches represents more than 0.5 percent of the employer’s total Forms W-2 in the report. The agency believes these criteria limit the recipients of employer no-match letters to those who have potentially significant problems with their employees’ work authorization. Employers with stray mistakes or minor inaccuracies in their records, the DHS said, do not receive employer no-match letters. As a result, the DHS concluded that employers who receive no-match letters cannot reasonably assume the problems are merely trivial clerical errors, and therefore cannot reasonably simply ignore those letters. The DHS therefore finds that an employer’s failure to conduct reasonable due diligence upon receipt of an SSA no-match letter can, in the totality of the circumstances, establish constructive knowledge of an employee’s unauthorized status.
The DHS noted that the August 2007 final rule specifies actions that can be taken by an employer that the agency will consider to be a reasonable response to receiving an SSA no-match letter or DHS letter, which “will eliminate the possibility that either letter can be used as any part of an allegation that an employer had constructive knowledge that it was employing an alien not authorized to work in the United States.”
In light of the district court’s concerns about the DHS’s possible encroachment into the authority of DOJ, in the March 2008 supplemental proposed rule the DHS rescinds the statements in the preamble of the August 2007 final rule describing employers’ obligations under antidiscrimination law and discussing the potential for antidiscrimination liability faced by employers that follow the “safe-harbor” procedures set forth in the August 2007 rule. For example, the DHS is rescinding conclusive statements from the preamble of the August 2007 final rule such as, “employers who follow the safe harbor procedures…will not be found to have engaged in unlawful discrimination.” The DHS said it also will “revisit” the language in its insert letter after the supplemental proposed rule is finalized. The rescissions do not change existing law or require any change to the rule text, the DHS noted.
Employers seeking information regarding their antidiscrimination obligations in following the safe harbor procedures in the August 2007 final rule, as modified by the March 2008 supplemental rule, should review new guidance from the DOJ’s Office of Special Counsel for Immigration-Related Unfair Employment Practices at http://www.usdoj.gov/crt/osc/index.html. Employers may also seek advice on a case-by-case basis through OSC’s toll-free employer hotline at 1–800–255–8155. The DOJ’s public guidance on employers’ antidiscrimination obligations will be published in a Federal Register notice when the DHS promulgates the March 2008 supplemental proposed rule as a final rule.
The DHS is proposing to further clarify two aspects of the August 2007 final rule. First, the rule instructs employers seeking safe harbor that they must “promptly” notify an affected employee after the employer has completed its internal records checks and has been unable to resolve the mismatch. After reviewing the history of the rulemaking, the DHS believes that this obligation for prompt notice ordinarily would be satisfied if the employer contacts the employee within five business days after the employer has completed its internal records review. The DHS emphasized that an employer does not need to wait until after completing this internal review to advise affected employees that the employer has received the no-match letter and request that the employees seek to resolve the mismatch: “Immediately notifying an employee of the mismatch upon receipt of the letter may be the most expeditious means of resolving the mismatch.”
Second, plaintiffs in the litigation before the district court raised a question as to whether, under the August 2007 final rule, an employer could be found liable on a constructive knowledge theory for failing to conduct due diligence in response to the appearance of an employee hired before November 6, 1986, in an SSA no-match letter. The DHS noted that when Congress enacted INA section 274A as part of the 1986 Immigration Reform and Control Act, it included a grandfather clause in that legislation exempting workers hired before IRCA’s date of enactment from the provisions of section 274A(a)(1) and (a)(2). Because those statutory bars against hiring or continuing to employ individuals without work authorization do not apply to workers within that grandfather clause, the DHS said that the August 2007 final rule, as published and as supplemented, does not apply to any such workers that may be listed in an SSA no-match letter.
The DHS said it has filed an appeal to have the preliminary injunction dissolved. The agency is continuing this simultaneous rulemaking in the meantime, which it said is intended to lead to the rule becoming effective as quickly as possible and “is not a concession of any issue pending in the litigation.”
Comments are due by April 25, 2008, and should be submitted using the procedures outlined in the supplemental proposed rule, which details the DHS’s position on the district court’s ruling and includes information on estimated costs of compliance for employers. The supplemental proposed rule is available as a PDF. A press release is available here.
Employers may also wish to consider using E-Verify, an Internet-based system operated by the DHS in partnership with the SSA that allows participating employers to verify the employment eligibility of their newly hired employees, including the validity of their Social Security Numbers. E-Verify is available here.
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